SEC revokes license of alleged pyramid firm

MANILA, Philippines — The Securities and Exchange Commission (SEC) has revoked the corporate registration of an investment-taking entity employing a pyramid-like scheme.

In a Jan. 10 revocation order, the SEC said SERP Worldwide or the Secret for Elimination of Rampant Poverty Worldwide has been soliciting investments from the public without the necessary license.

The regulator said that while SERP Worldwide is a registered corporation, it does not have the license to sell securities or take investments from the public.

According to the SEC, SERP Worldwide asks investors to pay P10,000 to avail of a package with a promise to earn up to 60 percent in profit, including bonuses.

“The scheme of SERP Worldwide has the characteristics of a pyramid scheme. The pyramiding scheme involves securities,” SEC said.

The recruitment fees collected from new recruits are used to pay the commissions given to earlier recruits.

Furthermore, the SEC said the scheme of SERP Worldwide involves the sale of securities to the public, which means it is required by the Securities and Regulation Code to obtain the appropriate license or permit from the regulator.

Last September, the SEC already issued a show cause order against SERP Worldwide directing the company to show cause why it should not be slapped with administrative and criminal sanctions for its unauthorized activities.

In October, SERP Worldwide submitted its reply, denying that it was engaged in the issuance or sale of investment contracts.

It also submitted additional documents, but not for selling securities or investments.

The SEC has also concluded that SERP Worldwide earns through the recruitment of investors and not through the sale of its products.

Upon joining the company, a member will receive P12,250 worth of products, a lifetime membership discount, monetary aid worth P110,000 and other incentives.

A member can also earn from direct selling, direct sales bonus, pairing sales bonus, reorder rebates, commissions and royalty income.

The SEC said the thrust of the company’s offering is not the sale of its products for use or consumption, but the offering and selling of an “income opportunity” or “ways to earn” through its package offered to the public to lure investors.

“SERP Worldwide’s employment of direct selling of goods and merchandise to consumers is nothing but a way to ostensibly make it appear that it is involved in selling consumer products when the fact of the matter is that it is offering the opportunity to earn profits by investing in its investor recruitment business in the guise of selling product packages,” the SEC said.